This week, we sit down with Gavin Heaton, digital strategist for IBM, Fujitsu, and McDonalds, and now the founder of the Disruptor’s Handbook, a network that helps companies unlock the potential of disruptive business models. In this interview, Gavin mentions a conversation he has with a futurist friend on predicting trends. His friend says, “When change is accelerating, to look five years into the future, you have to look ten years into the past and that will give you a sense of how much things have changed.”

So let’s flash back to 2005 for a moment. Wi-Fi came of age in 2005. Radio frequency identification (RFID), blogs, and hybrid cars were heralded as the “next big things.” Mass marketing ruled and marketing was heavily focused on brand awareness. Marketing’s come a long way, but where’s it heading next?

The Power of PANDA: Gavin talks about the future of marketing along 5 dimensions guided by this acronym– (P)urpose, (A)nalytics, (N)etworks, (D)igital, and (A)rt. I encourage you to read the notes below—but, one thing that struck me was the notion of art—that the technical aspects of what we do will once again fade to the background and allow marketers to focus on the creative element of what we can do in the digital medium. This is an enticing vision—and, of course, only serves to raise the bar for marketers everywhere to rebuild and retool with digital skills and technologies so that they can indeed get to this new world. There is no question in my mind that the new world is a new mix of art and science—but, that today’s marketers are struggling with the new science.

Conversation must have a purpose: As we have been talking about this new era of marketing—the era of engagement marketing—this topic was right on the money. One of the key principles of engagement marketing is that engagement must be ‘directed’—that we as brands have somewhere we want to go and that consumers also have somewhere they want to go. Gavin states, “The problem is often that businesses look at engagement as just having a conversation, rather than having a conversation for a reason.”

A seat at the biggest table: A key element of Gavin’s acronym is Analytics Gavin states, “And the interesting thing is that thanks to the power of the analytics that we’ve been given, we can actually start to understand the impact marketing has on the business, rather than these fuzzy metrics like reach and frequency and so on. We’ve actually got a great deal of power that comes from understanding how marketing’s levers affect the bottom line, generate revenue, or deliver return on investment in marketing. That is hugely powerful.” I couldn’t agree more—it is a marketing first world

I’d love to know how you feel about Gavin Heaton’s approach to digital marketing in the comments below. Do you think marketing deserves a seat in the boardroom? And to revisit these great interviews with industry luminaries like Aditya Joshi and Seth Godin, visit www.marketo.com/next-era.

Economist Intelligence Unit: Your website is called “Servant of Chaos” and your URL is servantofchaos.com. How did you come up with that name?

Gavin Heaton: I used to work for a consulting company and I headed up communications during a merger. Everything was changing every single day. We set up some Yahoo! accounts for instant messaging, and the account that I set up was serving the chaos and not really managing or controlling it. The name stuck. It became the name of my blog. And it still is.

EIU: It’s a metaphor for how a lot of people, including marketers, feel about the world we’re in now, where we’re not guiding the future but trying to pick our way through it as it comes at us a little too fast.

Gavin Heaton: That’s exactly how I think of it.

EIU: Tell me a bit about your background.

Gavin Heaton: I’ve worked on both the client side and the agency side of marketing, mostly for large enterprises, most recently big technology companies like SAP and IBM. I had a stint as the Head of Digital Strategy for the agency that looked after McDonald’s. We ran happymeal.com for four or five years and some digital strategies for McDonald’s globally. I spent about a year-and-a-half or two years working with a marketing analyst agency called Constellation Research. Digital marketing and digital transformation are my areas of specialty.

EIU: That’s a diverse portfolio. You’ve got B2B IT services with SAP and IBM. You’ve got the agency side, the analyst side and pure consumer side in your work with McDonald’s.

Gavin Heaton: Yes. And then over the last 12 to 18 months, I’ve been looking at start-ups and how they have started working in a more agile way. I’ve been running a couple of corporate start-ups for PwC as an internal venture project manager.

EIU: Imagine you’re in 2020. Some marketers are firing on all cylinders and some are struggling. What’s the difference between the two groups?

Gavin Heaton: I asked a futurist friend of mine how he guesses future trends. He said, “When change is accelerating, to look five years into the future you have to look ten years into the past, and that will give you a sense of how much things have changed.” So let’s look back to 2005. That’s our baseline. We’ll take what we’ve learned since then and use it to predict it out to 2020.

The power of PANDA

Gavin Heaton: I think we’re in a part of the cycle where what was old becomes new again and what we think is important now will become more transactional. I came up with an acronym, PANDA, to talk about how marketing is changing.

The “P” is for “purpose”. There was a time when brands stood for something. That’s coming back. We need to give our customers a reason to engage with us. Purpose is going to be a driving force over the next five years.

“A” is for “analytics”, which sounds obvious, except we need to apply the “A” to the “P”–the “analytics” to the “purpose”. We need to look beyond corporate social responsibility to analyze how the social impact plays out. Market protocols are creating shared values, shared space, and we need to understand where our brands fit within that space. And that’s going to have to be driven by analytics; you have to know most stuff that we don’t know right now.

The “N” is for “networks”. Networks are powerful, as we’re seeing in the rise of the social web. And businesses are part of those networks. We need to understand what the networks are, which technologies join them together and where they overlap.

The “D” is “digital”. I read a forecast the other day that 75% of marketing spend will be digital in the next two to three years. Digital doesn’t necessarily mean social; social has just been the DNA of how we do things. That digital connection, whether it is Internet of things, whether it is devices, whether it is a wearable, those digital networks are going to play a part in helping us understand who and where our customers are.

The “A” is “art”. I think we’re going to start seeing less technical stuff. We’re going to see how our creative thoughts really handle digital in a creative way. It’s going to be more fun and more interesting, and the combination of the artistic and the technical will get us to a more emotional and engaging place.

Earn a seat at the biggest table

EIU: We hear a lot about the marketing-led future, about how marketing is becoming a more critical function because relationships with customers are what will differentiate companies in the future. But I don’t get the sense that marketing is currently considered any more critical than other functions. It’s all over the place. In some places it’s important, in some places it’s ignored. Do you agree with the notion that marketing is going to become more important across the board?

Gavin Heaton: I do. We’ve heard for years that we need to have a seat at the table. That’s the table in the boardroom, not the one in the CFO’s office. And the interesting thing is that thanks to the power of analytics that we’ve been given, we can actually start to understand the impact marketing has on the business, rather than these fuzzy metrics like reach and frequency and so on. We’ve actually got a great deal of power that comes from understanding how marketing’s levers affect the bottom line, generate revenue, or deliver return on investment in marketing. That is hugely powerful. As we understand the “A”, we come to have a lot of leverage.

The shift has been gradual. It’s starting to gain momentum. But it requires us to rethink things that we do and try to earn leads and revenues and profits rather than just sitting back and talking about creating brand value or reach or page views. Marketers need to earn a relationship that results in dollars reported back to the board. Analytics allows us to do that.

Start small and simple to grasp the big and complex

EIU: Marketing and sales often fight over revenue attribution. And that has its roots in a bigger idea that no single function is really responsible for revenue, for profitability, or for any of the big metrics that investors pay attention to. Everybody plays a role. How do you solve that puzzle? How do you get to some kind of shared understanding of marketing’s contribution? Or are we still going to be fighting in 2020?

Gavin Heaton: In the start-up world you learn that you need to start small in order to understand and measure what’s happening. And only then do you think about how to apply those teachings to other disciplines within our business. For example, at SAP the community function was seen as outreach to developers. But it wasn’t really seen as a marketing-led function, and it wasn’t seen as anything that useful to our organization. It was a fairly small part of the company. There were 5,000 people and it was started by five or six.

It grew fast. In five to ten years it went from having a few hundred members to having millions of members. And then they grasped the downstream impact. You could count the number of questions being answered through the community forums and see that those answers decrease the number of calls to the call center. You’ve got quantifiable value. It’s not revenue, but it does affect costs in a big way. The savings were in a completely different part of the company. Understanding the flows of the impact and value across an organization is really challenging. But if you do the hard work, you can get to the value.

EIU: Could you talk a bit about how customer engagement differs from traditional ways of relating to customers?

Gavin Heaton: How you measure engagement differs for audiences. If your business model is about selling stuff online, you need to get some circulation and velocity on the website. You could do that through social means; it could be interaction-based. It could be as simple as page views. Or it could be more complicated. It could be about how we drive an online connection to an in-store connection point or a purchase. Or you could use a membership-based strategy. The engagement number is a tricky one, because it does need to be understood in the context of your business and community.

Easy to understand, hard to do

EIU: There’s this idea that engagement is an asset that you invest in, and you can measure the ROI of your investment. We’re used to investing in physical assets, so some people are uncomfortable with it. Is it hard to get across the idea of investing in engagement and measuring the ROI of that investment?

Gavin Heaton: It’s not difficult to grasp; it’s difficult to do. Think about the call center example. Here in Australia, we have a big telecommunications company called Telstra. Years ago they started doing outreach with Twitter, and they were getting into all sorts of trouble because they were looking for mentions of their brand on Twitter, and then they were responding by saying, “Here’s our phone number. Why don’t you give us a call?” And they were wondering why everyone hated them and why they were getting a lot of abuse on social networks. I was chatting with them and I said, “Look, to be honest, it’s because you don’t understand the dimensions of this channel, the resolution channel. The reason that they’re venting on Twitter is because they’re not getting through on the other channels. So you have to own that process, own that customer and own it through the resolution.”

They ended up opening up a customer call center based entirely on Twitter. And things started to turn around for them. Last week I was speaking with a Telstra customer who said, “I rang the Telstra call center, and I was on hold for 50 minutes and got disconnected and had to call back.” And I said, “Why don’t you just tweet them, because they respond quickly there?” And sure enough, within 15 minutes, it was all sorted out.

Conversation must have a purpose

Gavin Heaton: The problem is often that businesses look at engagement as just having a conversation, rather than having a conversation for a reason. They often forget that customers expect a commercial discussion; it’s not like they want to be our friend after all. The conversation has to be about improving the customer experience or giving a demo or getting a discount. It’s a conversation for a commercial or transactional purpose.

That doesn’t mean it can’t be engaging. In fact, if it could be a bit fun, that would be fantastic. Having a fun conversation for a commercial purpose makes the link between engagement and monetization. If you do those two things, then engagement can be measured and you will also have a downstream impact on your financials. That’s what we need to be able to do.

EIU: Do you think marketers are getting better at engaging customers? Are companies getting better?

Gavin Heaton: Yes, we’re getting better. Not in every case. Sometimes our conversations can be clunky and embarrassing, like hanging out with your uncle. But sometimes we discover that we’re having a good time. As we lose our fears of these digital channels, as we get better at using them, we start to understand how people like to be engaged.

Get a license from your customers

EIU: What other challenges are marketers going to be facing in 2020?

Gavin Heaton: In Australia, in the mining industry, we have this concept of the license to operate. It’s granted by the government. But there’s also a license granted by consumers and the community. If the community doesn’t like what you’re doing, they will just walk away. We saw this three years ago when teenagers walked away from MSN en masse. There was a three-month period where teens started to move to Facebook, and the way Gen Y engaged online changed overnight.

First they went to Facebook and they saw their parents join Facebook. Their grandparents. Very uncool. Then there was a little bit of Twitter, not much, and then there was a migration to SnapChat. I saw something today that said, “70% of Australian students are using SnapChat.” It’s massive and growing.

That’s our challenge: to be in the spaces where our audiences are and understand that they will leave us if we don’t work with them and understand their needs, not just around transactions, but around our society as well.

EIU: So you need to master all of these channels and be as agile and flexible as your audience is. When they move, you move.

Gavin Heaton: Absolutely.

Choose one but be ready to switch

EIU: In terms of budgets, it sounds like you have to have a stake in all the channels and be able to move very quickly if necessary. You can’t overinvest in just one.

Gavin Heaton: It comes down to analytics. We need to have a much stronger grasp of usage in all of these channels, because we can’t be everywhere all at once. We don’t need to be if our audiences aren’t there, and not every audience is going to be in every channel. But understanding where they are, their digital footprint, when the train is leaving the station and being able to move fairly quickly, that’s essential. And analytics gives us that power. Get your dashboards operating, watch the trends and get creative when things start to change.